Foxconn to open Apple stores across China

This site may earn affiliate commissions from the links on this page. Terms of use.

Foxconn is a name already strongly associated with Apple due to the fact the Taiwanese company handles a large amount of Apple product manufacturing. But Foxconn has admitted that just manufacturing the devices doesn’t actually bring in that much profit. In April, the company announced losses of $218 million for 2010 with revenue down 8.2% from the previous year due mainly to pricing pressures.

Foxconn clearly wants to make more money from the devices it manufactures, so it has come up with a solution: start selling them to consumers.

Foxconn has decided to invest heavily and open its own chain of stores in China selling Apple products. In doing so the company effectively gets two bites of the apple in terms of revenue generation. It can make a small profit directly from Apple for each device manufactured, then it can generate profit again on the sale of each device to consumers.

In total, Foxconn is going to spend 4.7 billion TWD (US$1.6 billion) on the creation of these stores. When you consider the company’s total revenue last year was $6.63 billion you can see how important and significant an investment this is.

I doubt Foxconn will be able to purchase the Apple devices to sell in its own stores any cheaper than existing retailers as that would be anti-competitive. However, I bet Apple would agree to allow shipments of devices heading to Foxconn stores to go directly from the Foxconn factories meaning they get stock in-store first and save having to pay a third-party company to ship them. That’s assuming such devices are in a saleable state when they leave Foxconn.

I think this is an intelligent move by Foxconn as it gives them some added security in terms of revenue. If they lose a big Apple contract to a competitor at least they will still be able to profit from them at retail. It also means with a retail chain established it can branch out to offer other items it manufactures as and when contracts are won.